Are We All Socialists Now? Not at All

The headline of Newsweek's current cover story reads: “We Are All Socialists Now.” The story tells us that Republicans and Democrats, oligarcos y peones, have given up on the market economy and, however reactionary some people’s rhetoric may be, we are all in fact being swept toward bigger government by an irresistible wave. Pretty soon, we Americans will be just like the French, though lacking a comparable command of the beautiful French language.

I don’t recommend the Newsweek article. Although the writers, Jon Meacham and Evan Thomas, have absorbed a number of true facts, their level of economic understanding is abysmal, and hence their reasoning is close to worthless.

Truth is, socialism is not the wave of the future. Indeed, it is already almost as dead as the dodo. Hardly anybody in a position of political power or influence now wants to establish socialism along the lines of the Soviets or the Maoists. Everyone knows that doing so is a one-way ticket to widespread poverty, which leaves precious little surplus for the political kingpins to rip off.

No, the world is converging ever more visibly, not toward socialism, but toward what I (following Charlotte Twight’s usage) have for many years been calling participatory fascism. The hallmarks of this system are, on the political side, the trappings of democracy (parties, elections, procedural niceties, etc.), and, on the economic side, the form of private property rights (though not much of the substance that characterizes the real thing).

The beauty of this system is that the political system can easily be corrupted so that the power elite retains a firm hold on the state, despite the appearance that they rule only with the consent of the governed. The major political parties appear to compete, but for the most part they coalesce and conspire; on the basics, they are in complete agreement. The apparent “consent” they enjoy they actually manufacture by their control of the mass media, the schools and universities, and other key institutions, and no political opinion outside the 40-yard lines ever receives a hearing in serious political circles. (Remember how the oligarcos rolled their eyes when Ron Paul managed to get in an occasional word during the debates last year?)

And while the ruling establishment retains an iron grip on state power, it allow entrepreneurs just enough room for maneuver so that innovators can continue to produce the new products, new methods of production, new raw materials, and new organizational forms that move the economy forward. The most enterprising entrepreneurs can still get rich, although even they will see a large chunk of the fruits of their labors ripped away by the state. The economy will improve its productivity sufficiently to keep a growing supply of creature comforts and amusements flowing to the masses, who are content with these things, along with the illusion of security that state functionaries induce in the people.

Lest you suppose that the masses are getting a raw deal, because their level of living would be so much higher in a genuine free-market system, bear in mind that virtually all of these people despise the free market. If you don’t think so, just give them an opportunity to live in one or even to move in that direction, conditional on their willingness to accept the personal responsibility and bear the risks that attend life in such a system – and you’ll see them flee quicker than a vampire exits at the first light of day.
How do you think we got into our present situation, anyhow? It’s not as though the masses were repeatedly given what they didn’t want. They had plenty of opportunities to say no to dependency on the state, but they turned away; and they do not intend to go back any time soon to what they imagine to be an unbearably harsh style of life. Rugged individualism might have been okay for their great-grandparents, but they want no part of it.

All of which leaves us – by which I mean nearly everybody on earth — converging on the only form of politico-economic system that has a stable equilibrium in our present ideological circumstances: participatory fascism. I am not saying that this system is the only one possible, forever and ever, amen. I am saying, however, that until the world’s people abandon en masse the collectivist ideologies that now determine their social cognition, policy evaluation, political practices, and personal identities, any hope for moving to a freer form of economic order as a stable equilibrium is virtually nil.

Anyone who would like to see the preceding argument spelled out in greater detail will find my most recent statement in the final chapter of my 2007 book Neither Liberty Nor Safety.

More Comments:

Michele Smith -
2/10/2009

Tim Sydney -
2/9/2009

Professor Higgs, as usual, dives to the essence of the issue. The problem is that the masses not only want regimentation and protection for themselves, but they fear freedom amongst their fellows.

Tim Sydney -
2/9/2009

Professor Higgs, as usual, dives to the essence of the issue. The problem is that the masses not only want regimentation and protection for themselves, but they fear freedom amongst their fellows.

Robert Higgs -
2/8/2009

Certainly the USSR's system, whatever else we might say about it, lacked the "democratic participation" aspect of participatory fascism. The USSR had a frankly one-party system, and its elections were universally recognized as farces--without permitting non-Communist parties to compete, how could they be seen in any other light?

On the economic side, the central-planning apparatus, whatever its deviations in practice, set the system apart from the ostensible private-property markets of participatory fascism. Nor did the USSR or Communist China permit entrepreneurs sufficient room for maneuver that they could generate rising productivity and get rich in the process.

In short, I see very little resemblance between these two politico-economic orders. Communism was never a stable equilibrium. As Mises demonstrated at the outset, it was doomed to fail because it had no way to do cost accounting. That failure was only a matter of time.

Participatory fascism, however, has covered the two major sources of possible failure: popular disaffection on the part of a public excluded from desired political participation (mainly, just voting), and economic decay caused by the rigidities of central planning. It may still fail, of course, because of bases it has not covered -- the inherent imbecility, for example, of retaining central planning for the monetary system. Stay tuned.

Thomas L. Knapp -
2/8/2009

What you refer to as "participatory fascism" sounds an awful lot like what James Burnham described as "managerialism," apart from the fact that he considered Soviet-style "socialism" to have quickly degenerated into managerialism as well rather than remaining actually socialist.